Two economics professors analyzed the political contributions and stock holdings of U.S. mutual fund and hedge fund managers and found that the ones that contribute blue tend to underweight companies that are considered socially irresponsible.

According to this study by Harrison Hong, professor of economics at Princeton, and Leonard Kostovetsky, asst. professor of finance at University of Rochester, Simon School of Business, this result holds true even for funds that are not explicitly SRI (socially responsible investing).

"Managers who donate to Democrats underweight (relative to non-donors or Republican donors) stocks that are deemed socially irresponsible. (e.g., tobacco, guns and defense, natural resources, and firms with low KLD scores). This effect is approximately one-half of the underweighting observed for socially responsible (SRI) mutual funds."

This is especially relevant now that the amount of money involved in SRI is growing. According to The Forum of Sustainable and Responsible Investment, "More than one out of every nine dollars under professional management in the United States today -- 11% of the $33.3 trillion in total assets under management tracked by Thomson Reuters Nelson--is involved in sustainable and responsible investing."

"One possible reason for such portfolio decisions is that investors might derive utility from avoiding companies that are in conflict with their values. They might not want to see their savings invested in causes that they oppose, similar to a boycott of certain consumer products.

An alternative...investors might think that companies inconsistent with their values will also be less profitable or more risky in the future."

The study also pointed out that "institutional ownership of "sin" stocks, particularly among endowments and universities but also among mutual funds and hedge funds, is lower relative to other stocks," and that "ownership of sin stocks tends to be dispersed among individual investors."

"It might simply be that institutions want to avoid the hassle of owning socially irresponsible stocks to the extent that such stocks face more litigation risk or bad press. But anecdotal evidence suggests that political values are also likely to be at play."